Power Finance Corporation Ltd (PFC)
🎯 Key Takeaways
- Power Finance Corporation Ltd is transitioning from a traditional power sector financier to a broader infrastructure finance platform with strategic emphasis on renewable energy, green hydrogen, and e-mobility, reinforced by its proposed merger with REC Limited. This shift aims to enhance scale and alignment with India's energy transition goals, though near-term profitability shows signs of pressure amid sectoral headwinds.
- Revenue declined 1.4% QoQ to ₹28,527 in Q1FY27.
- ⚠️ 1) Execution risk in the REC merger integration and regulatory approvals, 2) Margin compression from competitive pricing in the power finance sector,
📖 The Story
Power Finance Corporation Ltd is transitioning from a traditional power sector financier to a broader infrastructure finance platform with strategic emphasis on renewable energy, green hydrogen, and e-mobility, reinforced by its proposed merger with REC Limited. This shift aims to enhance scale and alignment with India's energy transition goals, though near-term profitability shows signs of pressure amid sectoral headwinds.
📰 What's Happening
The company completed the transfer of its subsidiary Fatehgarh II Transmission Limited to Power Grid Corporation for Rs. 19.11 crore, generating cash from non-core asset monetization. Management highlighted the proposed merger with REC Limited to create a combined entity with a ~₹12 lakh crore loan book and increased borrowing limits up to ₹9 lakh crore (INR) and USD 25 billion (foreign currency). The 40th AGM scheduled for August 31, 2026, will address dividend approval, director appointments, and strategic progress on the merger and green finance initiatives.
Source: Stock Announcements
📊 Quarterly Results (₹ Cr)
| Metric | Jun 2025 | Sep 2025 | Dec 2025 | Mar 2026 | Jun 2026 |
|---|---|---|---|---|---|
| Revenue | 28,539 | 28,890 | 29,095 | 28,920 | 28,527 |
| Operating Profit | 11,109 | 10,046 | 10,474 | 11,155 | 11,224 |
| OPM % | 38.9% | 34.8% | 36.0% | 38.6% | 39.3% |
| Net Profit | 8,981 | 7,834 | 8,212 | 8,598 | 8,998 |
| EPS | ₹20.81 | ₹17.40 | ₹19.07 | ₹21.21 | ₹21.25 |
Operating profit margin has declined from 38.9% in June 2025 to 36.0% in December 2025, reflecting margin pressure despite stable revenue trends. Net profit growth has plateaued, with EPS stagnating around ₹21 levels in recent quarters, suggesting challenges in sustaining profitability amid rising competition and sectoral investments. The downward trend in OPM indicates increasing cost pressures or pricing constraints in the loan book.
🔮 Management Outlook & What's Next
Management explicitly outlined plans to expand into green hydrogen and e-mobility, emphasized adherence to ESG frameworks, and underscored the strategic rationale of the REC merger to enhance scale and national infrastructure finance capabilities. They also highlighted increased borrowing limits to support growth, with the AGM agenda including dividend approval and governance updates as part of broader shareholder communication.
Extracted from official company announcements. Not StockFin.ai's opinion.
🏦 Balance Sheet (₹ Cr)
| Item | Mar 2025 | Mar 2026 | Mar 2026 | Mar 2027 |
|---|---|---|---|---|
| Equity Capital | 3,300 | 3,300 | 3,300 | 3,300 |
| Reserves | 1.14 L Cr | 1.24 L Cr | 1.30 L Cr | 1.40 L Cr |
| Borrowings | 9.72 L Cr | 10.01 L Cr | 10.13 L Cr | 10.01 L Cr |
| Total Liabilities | 11.78 L Cr | 12.23 L Cr | 12.45 L Cr | 12.46 L Cr |
| Fixed Assets | 754 | 742 | 770 | 736 |
| Investments | 12,792 | 14,283 | 15,550 | 16,024 |
| Total Assets | 11.78 L Cr | 12.23 L Cr | 12.45 L Cr | 12.46 L Cr |
The balance sheet shows stable equity of ₹3,300 crore with reserves growing from ₹1.24 lakh crore to ₹1.40 lakh crore, indicating retained earnings accumulation. Borrowings remain elevated at ₹10.01 lakh crore but have stabilized over the last two reporting periods, suggesting disciplined capital structure management despite high leverage (D/E of 7.62). Total assets have plateaued around ₹12.46 lakh crore, reflecting limited organic asset growth recently.
💰 Cash Flow Statement (₹ Cr)
| Item | Mar 2026 |
|---|---|
| Operating | -4,505 |
| Investing | -3,441 |
| Financing | +9,265 |
| Net Cash Flow | +1,319 |
👥 Shareholding Pattern
| Category | Q2FY26 | Q3FY26 | Q4FY26 | Q1FY27 |
|---|---|---|---|---|
| Promoters | 56.0% | 56.0% | 56.0% | 56.0% |
| FII | 18.8% | 18.3% | 19.6% | 20.5% |
| DII | 16.0% | 15.5% | 15.1% | 14.5% |
| Public | 7.4% | 8.3% | 7.4% | 7.0% |
| # Shareholders | 10,97,217 | 11,30,351 | 10,54,196 | 10,04,992 |
Institutional investor interest is declining, with FII holdings decreasing from 20.54% in Q1FY27 to 19.64% in Q4FY26 and peaking at 20.54% earlier, while DII outflows accelerated as their share dropped from 16.03% to 14.51% over the same period. Promoter holding remains stable at 55.99%, but the reduction in foreign and DII stakes signals weakening institutional confidence or re-rating concerns amid sectoral transition risks.
⚖️ Peer Comparison — Finance
| Company | MCap (₹ Cr) | P/E | ROCE | ROE | D/E |
|---|---|---|---|---|---|
| BAJFINANCE | 6.56 L Cr | 32.2 | 10.4% | 18.1% | 3.82 |
| BAJAJFINSV | 3.15 L Cr | 31.0 | 11.4% | 26.5% | 5.50 |
| SHRIRAMFIN | 2.49 L Cr | 18.7 | 11.5% | 17.1% | 3.80 |
| TATACAP | 1.56 L Cr | 28.6 | 8.4% | 12.3% | 5.28 |
| JIOFIN | 1.56 L Cr | 73.3 | 2.3% | 1.6% | 0.17 |
| CHOLAFIN | 1.55 L Cr | 26.7 | 9.3% | 18.9% | 6.93 |
| ICICIAMC | 1.50 L Cr | 30.0 | 111.5% | 83.6% | 0.00 |
| BAJAJHLDNG | 1.26 L Cr | 14.3 | 12.4% | 12.3% | 0.00 |
| MUTHOOTFIN | 1.17 L Cr | 10.3 | 14.4% | 29.3% | 3.88 |
| SBIFUNDS | 1.16 L Cr | — | — | — | 0.00 |
🔗 Peer Stock Analyses
⚠️ Risk Factors
1) Execution risk in the REC merger integration and regulatory approvals, 2) Margin compression from competitive pricing in the power finance sector, 3) High leverage (D/E 7.62) limiting flexibility during economic downturns, and 4) Slower-than-expected progress in green hydrogen and e-mobility monetization despite strategic announcements.
📋 Recent Filings
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🟡 related party transaction 29 August 2026Power Finance Corporation announced the transfer of its wholly owned subsidiary Fatehgarh II Transmission Limited to Power Grid Corporation on 28 Augu...
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🟡 Board Meeting 12 August 2026Power Finance Corporation announced the upcoming 40th Annual General Meeting scheduled for August 30, 2026, with e-voting facilities, as published in ...
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🔴 annual report 9 August 2026The 40th Annual General Meeting of Power Finance Corporation Limited (PFC) is scheduled for August 31, 2026, via video conferencing, with shareholders...
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🟡 Board Meeting 8 August 2026Power Finance Corporation announced its 40th Annual General Meeting will be held on August 31, 2026 at 11:00 AM via video conferencing, with notice pu...
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Announcement 27 July 2026Power Finance Corporation announced incorporation of a wholly owned subsidiary, Kushtagi Transmission Limited, to serve as the Bid Process Coordinator...
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🟡 Board Meeting 23 July 2026Power Finance Corporation Limited announced that its Board approved on July 23, 2026 a shareholder proposal to increase borrowing limits to Rs. 9,00,0...
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Announcement 13 July 2026Power Finance Corporation announced the incorporation of a wholly owned subsidiary, Satara Power Transmission Network Expansion Scheme SPV, to support...
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Announcement 10 July 2026Power Finance Corporation Limited announced the pricing of $3 billion floating rate notes due 2029 under its U.S. dollar medium term note programme, w...
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Announcement 30 June 2026Power Finance Corporation announced the transfer of its wholly owned subsidiary Kakinada I Transmission Limited to Power Grid Corporation on 29 June 2...
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🟡 Board Meeting 24 June 2026Power Finance Corporation Limited announced the appointment of Shri V. Packirisamy as Director (Commercial) effective 02.06.2026 and Shri Pankaj Gupta...
🧠 Analyst's Read
PFC is repositioning as a national infrastructure finance platform with strategic intent aligned to India's energy transition, but near-term financial performance shows early signs of strain. Investors should monitor the pace of green loan growth, merger execution timeline, and trajectory of margin recovery in upcoming quarters.
Based on filing content and financial data. Not a recommendation.
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Data sourced from stock announcements. Analysis generated by StockFin.ai.
For informational purposes only — not investment advice. Updated 2026-09-02.
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This analysis was programmatically compiled using StockFin AI utilizing official regulatory disclosures from the BSE and NSE. Content is automatically synthesized and audited against public financial filings. StockFin.ai is an educational research platform and is NOT a SEBI-registered investment advisor or research analyst.
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